Returning to the U.S. after 25 years, Fiat has a reputation to uphold, and another to overcome

By Danielle Douglas
Monday, January 31, 2011;
18

Amid a sea of glittering chrome and steel, there they were: the new Fiat 500s. A family of five funky, ladybug-shaped sedans, they stood guard in a half-moon display around the towering Fiat tent at this year's Washington Auto Show, which runs through Sunday.

Each car was bathed in rich colors, like "rame" orange or "azzurro" blue, with one vehicle covered in paintings and graffiti. The Italian car company showcased the new models in modish European style, with retro, white lounges nearby and glass display cases housing Fiat brand paraphernalia. And at the center of it all was the predecessor to the modern Fiat 500, the pint-sized 1970s Cinquecento, a nod to the automaker's past, adjacent to examples of its future.

It should come as no surprise that Fiat went all out this year at the auto show, as the company will start rolling out the 500 at Washington area dealerships next month.

The debut will mark Fiat's return to the United States after a 25-year absence from the market. With this move, the company, which helped rescue Chrysler and now holds a 25 percent stake in the automaker, will pull the maker of popular trucks and sport-utility vehicles into the subcompact sector. The question is whether local road warriors will bite.

Fiat faces established rivals and will have to ovecome a past reputation for unreliability.

There are eight Chrysler dealerships in metropolitan Washington, out of 130 across the country, set to carry the Fiat 500: Criswell Fiat of Gaithersburg and Fiat of Glen Burnie, Frederick, College Park, Silver Spring, Alexandria, Tysons Corner and Sterling.

These dealers are creating special Fiat Studios, as the showrooms will be called, featuring full displays of accessories and parts. The individual process of assembling the studios has resulted in a staggered launch schedule, with many dealers looking at an April opening.

Criswell Fiat of Gaithersburg, however, is ahead of the game. Most of its showroom is completed and just last week the demonstration car arrived, said Giles Bibic, the store's Fiat sales manager. He anticipates the extension of Criswell Auto will be up and running at the end of February or the first week in March.

By then, Bibic will have all three editions of the 500 -- the Pop, Sport and Lounge -- on the floor. They climb in price based on finishes and features, with the Pop starting at $15,500, the Sport at $17,500 and the Lounge at $19,500.

Bibic, a former Mini Cooper dealer, said that since he came on board in November, close to two dozen eager Fiat fans in the Washington area have given $500 deposits to reserve the new car.

"The Washington market is definitely more economically and environmentally more conscious," Bibic said. "And [the 500] has high gas mileage, a smaller carbon footprint and is going to do very well."

At this point, more than 1,500 people have expressed interest in the vehicle. "We've got a long wait list," said Laura Soave, head of the Fiat brand in North America. "People are excited and so are we."

When the brand was last sold in the United States, it certainly gained its share of followers, with nearly 20 Fiat car clubs still in existence across the country. Locally, the National Capital Fiat Club has 180 members, who are proud owners of at least one model of the Italian cars, according to the group's president, Todd Rosenthal of Hagerstown.

He owns three Fiats -- the 124 Spider from 1972 as well as an '86 and '87 X19, one of which he purchased earlier this month. Rosenthal has not signed up for the 500, though he said many of his friends have; he's waiting for the convertible.

"They are fun cars," Rosenthal said of Fiats. "They may not have a lot of horsepower, but they rev high and they drive well."

But for every fan there is a critic who disparages Fiats as being unreliable.

" 'Fix it again, Tony' is what it's been called," said auto analyst Rebecca Lindland of IHS Global Insight. "And the company didn't exactly leave the States on a high note."

Fiat hasn't fully repaired its reputation, ranking near last in J.D. Power and Associates' 2010 U.K owner satisfaction survey. The company, however, witnessed an upswing in sales in the fourth quarter, resulting in earnings of $435 million, compared to a loss of $387 million the same period a year earlier.

The company is aiming to sell 50,000 cars in North America in the first year, with designs to double that number by 2014. Next quarter, the drop-top Fiat Cambrio will hit the market, followed next year by the sporty Abarth brand and the fully electric 500 model.

"Laura Soave is not burying her head in the sand about the reliability concern," Lindland said. "She has made sure that buyers of the 500 have three-year, 36,000-mile free maintenance so people can feel reassured about not getting stuck with $3,000 repair bills in the first few years."

The new Fiats are outfitted with a standard 1.4-liter, four-cylinder engine, with a five-speed manual transmission. Though the Environmental Protection Agency has not yet given the 500 a fuel economy rating, Fiat is estimating a combined rating of 33 miles per gallon for the stick shift and 30 mpg for the automatic. That is comparable to or exceeds similar subcompacts.

A few tweaks were made to the new 500 to accommodate American tastes -- addition of a glove box, larger seats, an armrest and the option of a six-speed automatic transmission. With its various style and equipment options, there are more than 500,000 ways to configure the car, according to Soave.

The new Fiat will be delivered into a market ripe with fuel-efficient small cars, such as the Honda Insight, Ford Fiesta and Toyota Yaris. And Washington area drivers are pretty loyal to their preferred brands, especially Toyota, said Charles S. Stringfellow Jr., chairman of the Washington Auto Show.

"If you look at the registration data for this area, you see Honda and Toyota are two of the bigger registrations of vehicles," said Stringfellow, who also heads Brown Automotive Group in Fairfax. "It's a very competitive segment for Fiat to come into."

The correlation between the demand for compact, fuel-efficient cars and rising gas prices is likely to impact how well Fiat does coming out of the gate.

"There is a lot of speculation with the spike in fuel prices about where's the tipping point that sends consumers into the showroom to buy the more fuel-efficient automobile," said Stringfellow.